Here's a video you wont easily forget

Let's not forget that RE also benefit from low interest environment like now so you almost can't lose in RE investing

 

So from how understand it, inflation is followed by increases in interest which results in lower asset prices.

so the price of stuff goes up but assets go down. So high inflation equals lose lose for re investing.

 

not really, not with RE and gold, I suggest you to study economic of 80s and what inflation did to house prices. Also think about what you're using to build houses or apartments...

 

@Big A here is a simple explanation
Is There a Correlation Between Inflation and Home Prices?

 

Thank you @icic . Learning every day.
Well I’m screwed then. I only hold 1 investment property and don’t intend on accumulating anymore resi investments.

oh well stocking up on cans of baked beans it is for me.

 

you most welcome @Big A. Mind you that canned baked beans will go bad just like recently built apartments although not nearly as quickly

 

BigA....this guy explains things very well

 

All I understood from the video is that the whole system is one big ponzi scheme. But as long as the ponzi scheme is run by the governments and especially by the US gov then the scheme will go on. But I did notice the part in which he points out that printing money leads to inflation. inflation leads to increased bond yields. Increased bond yields leads to higher mortgage rates.

Now I am no expert but a significant increase in mortgage rates would normally result in lower property prices. Either way I think if the worse case scenarios in either of these videos was to come to fruition I highly doubt resi property investors would be immune or be better off.

I still think my baked beans would be the most valuable asset. And that's even if they are past there used by date. You just see, if it comes around you will be begging me to swap your investment property for a few cans of my baked beans. And they will be the good kind not the homebrand ones.

 

I dunno about this. Maybe in the past but with the anaemic recent wage growth....it's hard to tell if this correlation still carries.

 

So, should we or dare we invest our life savings in China? Even though the presenter said their economy is healthier. However, one decision by the Government your sweet dream might become nightmare. For those who have bought property in China would know, a sentence uttered by His Highest would cool the market by a significant percentage, and it can be effective by midnight. Also, have you tried shipping your sales proceeds back to Australia? Interesting scenarios...

 

Wage growth and inflation(CPI) quite are topically closely correlated. What we have now is that wage growth has been very subdue and therefore CPI has been quite subdue as well. If inflation increases, it's likely to come with labour cost increase and an obvious building material cost increase. To give you an example, In the early 2000s I was able to get a beautiful 300sqm rural family home built and finished for under 200k for my parents. Just last year, my brother just got somthing of similar size(but lower quality) finished for just under 600k.

 

I'm a bit confused by some of the comments here. Yes this person has FUM primarily in emerging markets. And sure, that could be seen as him having a vested interest in spruiking investments in emerging markets while eschewing developed markets, because he wants people to transfer all or the majority of their capital out of developed markets and into emerging markets.

Equally, it could just well be that instead of his views being motivated by his vested interests, that it's the other way around. That is, because of his views he has FUM in emerging markets.

So while I think it's important to have healthy skepticism, question everything and not just blindly believe some random guy on the internet, it's equally important to listen to the points he is making, determine if it makes sense to you, check if he has missed alternative points that rebuke his points etc. If he is making valid points, hasn't made invalid assumptions, and what he says makes sense, then I don't see why his views should be dismissed just because there is a possibility that it could be motivated by his FUM in emerging markets (while equally possible that his FUM in emerging markets could instead be motivated by his views).

I found it interesting that he never tried to claim that emerging markets will be immune to what he believes is coming. He states several times that he thinks that emerging markets will be hit hard, but that because they are suffering from contagion and overall immediate global demand instead of integral structural deficiencies such as the West, that they will recover quicker. Because of the strength and growth in the West for so long, that it's very very unlikely that it will turn to crap. I'm sure that's what Japan and the world also thought when such a clever, hard working, innovative country such as they had economic stagnation so deep and long that it was official given the term The Lost Decade. But it's not just a decade, they lost 30 years. Asset prices adjusted for inflation were the same in 2013 as they were in 1983.

 

My curious observation is; if Western developed societies are so bad (according to this man), then why are so many Countries trying to become developed, and why are so many people around the world in under-developed Countries trying to get to developed Countries to live there?

 

They now have an Administration who is addressing the decades of debt and waste and working to reduce this trend.
They are currently waiting on the USMCA deal to be signed by Congress - which will reverse the horrific trade deficit of the TPP, and they have reversed the $500B per year trade deficit with China, plus well over 6 million new jobs created in the last 3 years and good GDP growth, reducing levels of spending on Aide, reducing spending on overseas wars, attracting investment and industry back into the Country, plus several other initiatives.

 

But he's not saying that Western developed societies are bad. He's not making a cultural comparison of West to East. He's merely saying that when the East went through their financial crisis, the International Monetary Fund and US treasury advised the East not to try and dig their way out of it by printing more money as it would make it worse for them in the long term. That they should just bear the pain because it was needed to correct for the excesses that led them to the mess that they were in.

Fast forward two decades, and the West has landed themselves in a similar mess due to similar excesses yet they aren't listening to the very advice they gave the East two decades ago.

Did you watch the video?

 

yes, I did.